As the following article suggests, LME metal prices are trading mainly lower this week in USD terms, however with just over a week until the end of the financial year here in Australia, we are pleased to be able to hold prices reasonably steady for the time being. This is mainly due to the fact that the Australian Dollar has lost ground over the last few days.
Just about every commentary on the LME commodity markets refers to Greece which may be confusing as Greece isn’t a large user or supplier of LME metals. This week the yield on a 2 year Greek Government bond peaked at 30.32% p.a whilst at the same time the yield on a 2 year US Government Bond was 0.375% p.a. This issue being, the flight of money away from perceived risk assets into safe havens such as short term US bonds. When analysed through commodities, Nickel in particular is subject to sell offs, as it is seen to be price volatile and it is no surprise it is currently at a 7 month low.
The following article highlights a range of factors that are affecting current market prices, confirming (as we already know) just what a fragile global economy we live in.
Please find the following articles for your perusal;
Metals Lower As Euro, Equities Fall On Greece Woes By Rhiannon Hoyle Of DOW JONES NEWSWIRES
Metals Exchange base metals drifted lower in Asia Monday as near-term outlook is still clouded due to persistent Greek sovereign debt woes, with the deadline for the much-awaited bailout package likely to be finalized only by early July.
LME 3-month copper slipped lower and was trading at $9,000 a metric ton, down $94 from the previous close.
“The chances [of copper] slipping are greater than that of going up,” said a Tokyo-based trader, tipping support for the red metal at $8,700/ton this week.
Copper and other industrial metals are sensitive to economic development worldwide and subject to risk sentiment in the financial markets, as they are perceived to be high-risk. The metals are widely used in manufacturing and construction.
Earlier in the day, euro-zone finance ministers pledged to prevent any form of default in connection with Greek’s sovereign debt crisis and said they have narrowed their differences over how to get Greece’s private-sector creditors to contribute to the country’s financing in coming years.
Though Greece isn’t a big consumer of copper, participants are closely watching the crisis as a default could endanger the health of other European economies.
“In general, the market still seems happy to believe the Greek situation will be solved…In particular, the key appears to be whether the general feeling of hoping for the best, prevalent at the moment, deteriorates into fearing for the worst,” Standard Bank said in a note.